Anyone who has seen Peter Jackson's epic cinema adaptation of J.R.R. Tolkien's Lord of the Rings cannot fail to remember the visually stunning and dramatic scene in the third movie -- the Return of the King -- when the beacons of Gondor, an ancient alarm signal used to call for aid in the event of dire emergency, are lit. One by one the beacons flare up along the mountain range between Gondor and Rohan, leading to a crisis point of decision by the King of Rohan, who must decide whether or not to heed Gondor's call.
In the movie (in something of a change from the original text), the character of Gandalf -- one of the few to perceive the big picture, whose warnings are often dismissed or mocked by those who should listen to him -- is instrumental in the decision to light the warning beacons.
Recently, the far-seeing American author and technologist George Gilder has published a warning of similar urgency, presenting leaders with a similar crucial decision. In "The California Green Debauch" he expands on the arguments of his Wall Street Journal editorial of November of last year, and explains why the destructive "green" movement could directly cripple future economic growth, technological advancement, and ultimately the main bastion against totalitarianism in the world for the past sixty years, US military superiority.
In the article, he makes an eloquent argument for the importance of the venture capital mechanism for connecting capital with innovation, and says plainly: "Most people do not grasp the centrality of venture capital to the US economy. All the key technologies that support US wealth and power were developed by companies crucially supported by venture capital companies in California." George in fact believes that the venture capital industry is America's most important asset because the connection of capital with innovation has been directly responsible the nation's "technological leadership, military power, and roughly a fifth of GDP."
It is a hard-hitting piece that pulls no punches. We believe every investor should read it and understand it. More importantly, like the beacons of Gondor, we believe it is a warning of utmost urgency, and one that calls for difficult decisions, and ultimately for action.
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